Crime and punishment: Trademark Infringement in the grey market.

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Whilst most incidences of trademark infringement are dealt with by the bringing of civil proceedings, it is an often-overlooked fact, that the Trade Marks Act 1994 (TMA 1994) prescribes for an action for trademark infringement in criminal law.

Criminal actions in trademark law are brought under Section 92 of the TMA 1994. However, until recently it has been unclear whether these criminal actions could be brought in respect to ‘grey market’ and ‘grey goods’. The ‘grey market’ is the trade of a commodity through distribution channels that are legal, but unintended by the original manufacturer. ‘grey goods’ products are products sold by a manufacturer or their authorized agent, outside the terms of the agreement between the reseller and the manufacturer.

Supreme Court, provides much needed clarification in this highly important area.

The recent decision delivered on 3 August 2017 in the Supreme Court, provides much needed clarification in this highly important area. The Defendant in the case of R v M; R v C; R v T [2017] UKSC 58, is alleged to have been importing and subsequently selling goods, which had not authorised by the holder of the registered trademark. The goods described in the indictment take two forms:

The first, were counterfeit goods, in that their manufacture and subsequent affixing of the brand owners Mark was not done by or with the consent of the trademark holder. This is generally understood to be caught by Section 92 TMA 1994.

Trademark infringement can attract a prison sentence of up to 10 years.

The second, the ‘grey goods’, were originally authorised for manufacture and subsequently branded by the trademark holder, but were not approved for sale.

The question sent under Appeal to the Supreme Court was whether the second of these two types of goods fell into the ambit of the criminal offences set out in Section 92 of the TMA 1994. The Supreme Court agreed with the findings of the two lower Courts stating that from a literal reading of the Act it was apparent that ‘grey goods’ fall under the scope of Section 92.

The case will now be handed back to the Crown Court were the defendant will be tried under criminal proceedings. Criminal sanctions associated with trademark infringement can attract a prison sentence of up to 10 years or an unlimited fine. Not an insignificant deterrent to a potential offender.

From this decision, it is now clear that ‘grey goods’ will now be capable of being subject to criminal trademark sanctions just like pirated, counterfeit and bootlegged goods. It is currently unclear, whether this development will open the flood gates to a spate of private prosecutions by trademark holders seeking to enforce their trademark rights using criminal sanctions.

Whatever the future brings, the experienced trademark team at Albright IP will be ready to offer their clients the best possible advice about how the manage and enforce their Intellectual Property rights.

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Julia House

Julia is a very experienced practitioner and a Trademark Partner. She is able to call upon a wealth of knowledge acquired in-house and in private practice; making her well-placed to provide informed, commercial advice in relation to the issues at hand. Julia qualified as a British and European Trademark Attorney in 1991.

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You should register your Trademarks in the form(s) that you use them. If you use a word and a Logo, the strongest protection is usually gained by registering both.